What was supposed to be largely a US financial crisis seems to be spreading even further.  This might come as both a surprise and an annoyance to those who believe that the cause of the crisis was specific mistakes made by US bankers and regulators, but much less of a surprise to those who assume that runaway monetary expansion always leads to very risky and vulnerable financial systems, and the list of countries that have tolerated or even exacerbated runaway monetary expansion is a very long list.

Here in China, in sympathy with the weirdness abroad, the stock market is still racing around erratically.  On Wednesday the market bounced up and down violently several times before ending the day with the SSE composite up 15 points, or 0.7%.  Today, prices surged 5.3% within two hours of opening, and then gave some of it back to close at 2297, up 3.6%. 

The market surged, according to Bloomberg, “after the country’s two exchanges eased restrictions on equity buying by controlling shareholders and on speculation government-run investors increased purchases,” although I think the bank share purchases have been, fortunately, quite small (an article in today’s Xinhua stated that the net purchases of shares by Central Huijin in the three big banks amounted to increases in ownership of well under 0.001%).  The Bloomberg article goes on to say:

Under new rules taking effect today, the period in which controlling shareholders are barred from raising their stakes in publicly traded companies has been cut to 10 days before earnings are released, from 30, according to statements from the exchanges.  China's state-owned companies should be “a role model” in promoting “stable” development of the nation's capital markets by buying back shares in publicly traded units, the State-owned Assets Supervision and Administration Commission said Sept.